Question 1

A price floor set above the equilibrium price will

Accepted Answer

A)  clear the market for the good. 
B)  result in a shortage of the good. 
C)  result in a surplus of the good. 
D)  force some firms in this industry to go out of business. 
A)  clear the market for the good. 
B)  result in a shortage of the good. 
C)  result in a surplus of the good. 
D)  force some firms in this industry to go out of business. C

Question 2

A shortage of unskilled labor will occur if the minimum wage is set below the equilibrium wage in the unskilled labor market.

Accepted Answer

A) True 
 B)False  False

Question 3

A minimum wage law (that sets the minimum wage above the equilibrium wage)can be expected to

Accepted Answer

A)  clear the market for unskilled workers. 
B)  increase the number of unskilled workers employed. 
C)  increase the number of firms in those industries where the law is effective. 
D)  reduce the number of unskilled workers employed and/or reduce the number of hours worked by unskilled workers. 
E)  all of the above 
A)  clear the market for unskilled workers. 
B)  increase the number of unskilled workers employed. 
C)  increase the number of firms in those industries where the law is effective. 
D)  reduce the number of unskilled workers employed and/or reduce the number of hours worked by unskilled workers. 
E)  all of the above D

Question 4

If goods are not rationed according to price,if follows that

Accepted Answer

A)  they won't get rationed at all. 
B)  some non-price rationing device will be used to ration the goods. 
C)  first-come-first-served will necessarily be the rationing device used in the market. 
D)  there will be surpluses in the market. 
E)  none of the above 
A)  they won't get rationed at all. 
B)  some non-price rationing device will be used to ration the goods. 
C)  first-come-first-served will necessarily be the rationing device used in the market. 
D)  there will be surpluses in the market. 
E)  none of the above

Question 5

-Refer to Exhibit 4-11.Suppose that the government imposes a price ceiling in the market for good ABC at a price of $4.The result of the price ceiling would be a ____________ of ______ units of good ABC.

Accepted Answer

A)  shortage; 20 
B)  surplus; 20 
C)  shortage; 60 
D)  surplus; 60 
A)  shortage; 20 
B)  surplus; 20 
C)  shortage; 60 
D)  surplus; 60

Question 6

-Refer to Exhibit 4-6.Suppose the minimum wage is set at $7.The result will be

Accepted Answer

A)  a surplus of unskilled workers. 
B)  a shortage of unskilled workers. 
C)  no effect on the market for unskilled labor. 
D)  none of the above 
A)  a surplus of unskilled workers. 
B)  a shortage of unskilled workers. 
C)  no effect on the market for unskilled labor. 
D)  none of the above

Question 7

In order for a price floor to have an impact on a market it must be set below the equilibrium price.

Accepted Answer

A) True 
 B)False

Question 8

The minimum wage is a good example of a price floor.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is true?

Accepted Answer

A)  Buyers always prefer lower prices to higher prices. 
B)  Buyers never prefer lower prices to higher prices. 
C)  Buyers rarely prefer lower prices to higher prices. 
D)  Buyers prefer lower prices to higher prices,ceteris paribus. 
A)  Buyers always prefer lower prices to higher prices. 
B)  Buyers never prefer lower prices to higher prices. 
C)  Buyers rarely prefer lower prices to higher prices. 
D)  Buyers prefer lower prices to higher prices,ceteris paribus.

Question 10

Which of the following is false?

Accepted Answer

A)  When the U.S.government imposed price ceilings on gasoline,the result was a surplus of gasoline. 
B)  When the U.S.government imposed price ceilings on gasoline,the result was a shortage of gasoline. 
C)  If a price ceiling is imposed below the equilibrium price in a given market,the result is a shortage in that market. 
D)  First-come-first-served is a commonly used rationing device. 
A)  When the U.S.government imposed price ceilings on gasoline,the result was a surplus of gasoline. 
B)  When the U.S.government imposed price ceilings on gasoline,the result was a shortage of gasoline. 
C)  If a price ceiling is imposed below the equilibrium price in a given market,the result is a shortage in that market. 
D)  First-come-first-served is a commonly used rationing device.

Question 11

If the current market price of good Z is below the equilibrium price of good Z

Accepted Answer

A)  it must be because the government has imposed a price ceiling in the market for good Z. 
B)  there is a shortage of good Z. 
C)  there is a surplus of good Z. 
D)  demand must necessarily decrease to restore equilibrium. 
E)  a and b 
A)  it must be because the government has imposed a price ceiling in the market for good Z. 
B)  there is a shortage of good Z. 
C)  there is a surplus of good Z. 
D)  demand must necessarily decrease to restore equilibrium. 
E)  a and b

Question 12

Suppose the government imposes a price ceiling above the equilibrium price of a given good.Which of the following is the most likely result?

Accepted Answer

A)  Some other rationing device will emerge to allocate the good among buyers. 
B)  Some buyers and sellers will be willing to risk breaking the law in order to exchange the good at a price above the equilibrium price since there would be a shortage of the good at the price ceiling. 
C)  No change will occur in the market. 
D)  Brute force will be used to allocate the good among buyers. 
E)  a,b,and d 
A)  Some other rationing device will emerge to allocate the good among buyers. 
B)  Some buyers and sellers will be willing to risk breaking the law in order to exchange the good at a price above the equilibrium price since there would be a shortage of the good at the price ceiling. 
C)  No change will occur in the market. 
D)  Brute force will be used to allocate the good among buyers. 
E)  a,b,and d

Question 13

-Refer to Exhibit 4-1.At the equilibrium price,________ units of the good would be exchanged.With a price ceiling,_______ units of the good would be exchanged.

Accepted Answer

A)  125; 75 
B)  75; 125 
C)  175; 125 
D)  125; 175 
A)  125; 75 
B)  75; 125 
C)  175; 125 
D)  125; 175

Question 14

There are two goods in the economy: tea and rice.If the relative price of tea has increased it could be a result of

Accepted Answer

A)  a decrease in the absolute price of rice. 
B)  an increase in the absolute price of tea. 
C)  an increase in the absolute price of rice. 
D)  a and b 
A)  a decrease in the absolute price of rice. 
B)  an increase in the absolute price of tea. 
C)  an increase in the absolute price of rice. 
D)  a and b

Question 15

If the minimum wage is set above the equilibrium wage,then

Accepted Answer

A)  more people will work than at the equilibrium wage. 
B)  the same number of people will work as at the equilibrium wage. 
C)  fewer people will want to work than at the equilibrium wage. 
D)  there will be fewer labor hours purchased by employers than at the equilibrium wage. 
E)  none of the above 
A)  more people will work than at the equilibrium wage. 
B)  the same number of people will work as at the equilibrium wage. 
C)  fewer people will want to work than at the equilibrium wage. 
D)  there will be fewer labor hours purchased by employers than at the equilibrium wage. 
E)  none of the above

Question 16

What condition is necessary for a price floor to have an impact on a market? Describe two effects that a price floor can have on a market.

Accepted Answer

In order for a price floor to

Question 17

There are two goods in the economy,apples and bread.The relative price of apples has increased.This could be due to

Accepted Answer

A)  an increase in the absolute price of apples,ceteris paribus. 
B)  a decrease in the absolute price of bread,ceteris paribus. 
C)  a decrease in the absolute price of apples,ceteris paribus. 
D)  an increase in the absolute price of bread,ceteris paribus. 
E)  a and b 
A)  an increase in the absolute price of apples,ceteris paribus. 
B)  a decrease in the absolute price of bread,ceteris paribus. 
C)  a decrease in the absolute price of apples,ceteris paribus. 
D)  an increase in the absolute price of bread,ceteris paribus. 
E)  a and b

Question 18

-Exhibit 4-2 represents the orange juice market.The horizontal line represents a price ceiling imposed by the government.How many fewer units would be exchanged at the price ceiling compared to the number that would be exchanged at the equilibrium price?

Accepted Answer

A)  200 units. 
B)  100 units. 
C)  400 units. 
D)  800 units. 
A)  200 units. 
B)  100 units. 
C)  400 units. 
D)  800 units.

Question 19

-Refer to Exhibit 4-8.Suppose that wheat producers lobby the government for a price floor and receive one.This price floor is set at PF.What is the change in the total surplus at the price floor,compared to at the equilibrium price?

Accepted Answer

A)  There was a gain in total surplus equal to (area 1 + 2 + 3) 
B)  There was a gain in total surplus equal to (area 1 + 2 + 3 + 4 + 5) 
C)  There was a loss in total surplus equal to (area 4 + 5) 
D)  There was a loss in total surplus equal to (area 4 + 5 + 6 ) 
A)  There was a gain in total surplus equal to (area 1 + 2 + 3) 
B)  There was a gain in total surplus equal to (area 1 + 2 + 3 + 4 + 5) 
C)  There was a loss in total surplus equal to (area 4 + 5) 
D)  There was a loss in total surplus equal to (area 4 + 5 + 6 )

Question 20

At the minimum wage (set above the equilibrium wage),

Accepted Answer

A)  all individuals who end up working are paid less than if they were paid the equilibrium wage. 
B)  none of the workers will lose there jobs or find themselves working fewer hours. 
C)  none of the individuals who end up working are paid more than if they were paid the equilibrium wage. 
D)  there will be fewer people working (or fewer labor hours demanded)than at the equilibrium wage. 
E)  none of the above 
A)  all individuals who end up working are paid less than if they were paid the equilibrium wage. 
B)  none of the workers will lose there jobs or find themselves working fewer hours. 
C)  none of the individuals who end up working are paid more than if they were paid the equilibrium wage. 
D)  there will be fewer people working (or fewer labor hours demanded)than at the equilibrium wage. 
E)  none of the above

Exam 4: Prices: Free,controlled,and Relative

A price floor set above the equilibrium price will

A shortage of unskilled labor will occur if the minimum wage is set below the equilibrium wage in the unskilled labor market.

A minimum wage law (that sets the minimum wage above the equilibrium wage)can be expected to

If goods are not rationed according to price,if follows that

-Refer to Exhibit 4-11.Suppose that the government imposes a price ceiling in the market for good ABC at a price of $4.The result of the price ceiling would be a ____________ of ______ units of good ABC.

-Refer to Exhibit 4-6.Suppose the minimum wage is set at $7.The result will be

In order for a price floor to have an impact on a market it must be set below the equilibrium price.

The minimum wage is a good example of a price floor.

Which of the following is true?

Which of the following is false?

If the current market price of good Z is below the equilibrium price of good Z

Suppose the government imposes a price ceiling above the equilibrium price of a given good.Which of the following is the most likely result?

-Refer to Exhibit 4-1.At the equilibrium price,________ units of the good would be exchanged.With a price ceiling,_______ units of the good would be exchanged.

There are two goods in the economy: tea and rice.If the relative price of tea has increased it could be a result of

If the minimum wage is set above the equilibrium wage,then

What condition is necessary for a price floor to have an impact on a market? Describe two effects that a price floor can have on a market.

There are two goods in the economy,apples and bread.The relative price of apples has increased.This could be due to

-Exhibit 4-2 represents the orange juice market.The horizontal line represents a price ceiling imposed by the government.How many fewer units would be exchanged at the price ceiling compared to the number that would be exchanged at the equilibrium price?

-Refer to Exhibit 4-8.Suppose that wheat producers lobby the government for a price floor and receive one.This price floor is set at PF.What is the change in the total surplus at the price floor,compared to at the equilibrium price?

At the minimum wage (set above the equilibrium wage),

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Supply,demand,and Price: Applications

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,union,and Labor

The Distribution of Income and Poverty

Interest,rent,and Profit

Market Failure: Externalities, public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

The Economic Case for and Against Government: Five Topics Considered

Stocks,bonds,futures,and Options

Stocks,bonds,futures,and Options

Filters

-Refer to Exhibit 4-11.Suppose that the government imposes a price ceiling in the market for good ABC at a price of $4.The result of the price ceiling would be a ______ of units of good ABC.

-Refer to Exhibit 4-1.At the equilibrium price,__ units of the good would be exchanged.With a price ceiling,_ units of the good would be exchanged.

-Refer to Exhibit 4-8.Suppose that wheat producers lobby the government for a price floor and receive one.This price floor is set at P_F.What is the change in the total surplus at the price floor,compared to at the equilibrium price?